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Russians shun self-employment

Published time: January 24, 2012 12:29
Edited time: January 25, 2012 11:44

Doing business in Russia

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Russians don’t have that entrepreneurial spirit, and it’s now official.

­The Global Entrepreneurship Monitor puts Russia right at the bottom of its survey alongside the United Arab Emirates, and far behind other driving economies such as China and Argentina.

The Head of GEM Russia Alexander Chepurenko says in addition to modest figures of early–stage businesses in Russia the level of pessimism regarding the possibility of positive change in the near future is extremely high.

“The rate of activity lags behind with only 4.6% engaged in entrepreneurship. Moreover few entrepreneurs believe in positive changes which is why Russia was the last among a group of moderately developed countries with an index of growth of entrepreneurial activity about 5% year on year.”

The Global Entrepreneurship Monitor report says the figures reflect the conditions of doing business in Russia and business environment.

“Efficiency –driven economies with large populations and large land mass that show very low rates of internationalization are at the low end. In terms of Russia, the lack of institutions which support entrepreneurship and high concentration of monopolies lead to a reluctance by people to start their own business,”

If Russians decide to become self-employed and own their business, they are doing it in order to realise their entrepreneurial self-satisfaction rather than being forced by job conditions. The report says “There are more improvement-driven entrepreneurs in Russia rather than necessity-driven,”

Sergei Karikhalin from TKB Capital says the absence of coherent laws and fierce competition from state giants blocks small business activity.
“The state puts on pressure and suppresses small businesses. High taxes and various schemes to burden entrepreneurial activity along with a weak legal base puts the brakes on small business sector development,”

Chepurenko from GEM Russia adds that “high economic dependency on energy exports and state focus on intensive support of this sector makes employment more attractive to staring up your own business,”

Anton Safonov from InvestCafe says if the current business environment carries on investment activity will never improve. “The administrative and bureaucratic barriers are too high with tax and duties all the time increasing, paving the way for corruption. All this makes economic modernisation impossible,”

"At this point all the taxes or almost all the taxes go up on federal level and than some taxes go down, but as subsidies. It means there is no direct impact on municipal authorities from the development of business", explained Mikhail Mamuta from Russian Organization for Small and Medium Entrepreneurship or “Opora Rossia” .

"They should get these taxes, it means they will see direct links between number of small businesses, effectiveness of small business and their budget stability", he added.

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